This was the title of an article that caught my eye whilst having tea and toast with LB down at my local this morning. The thing that is hard to bet against is the price of TSLA – which if the press is to be believed seems to have become somewhat of a national sport among various US-based hedge funds. TSLA may be a Ponzi scheme, it may have dodgy financials, it may build shit cars (anyone who says otherwise has never driven a European car at the same price point) and Elon Musk could be as mad as a box of frogs but these are all speculative statements. The fact of the matter is that TSLA is trending up as can be seen below.
Granted the stock price is subject to extreme drawdown but it is not currently in drawdown because it is not currently in a drawdown. This may seem to an obvious thing to say but it is a point that has escaped many. However, there is a but as there always is. The chart below shows the actual short sale percentage.
As can be seen, the actual percentage of shares outstanding has dropped quite sharply since hitting a peak in July 2019. We, therefore, have two captives to a flawed narrative. Those who are betting against a share that has been trending up for the past eight months and those who are reporting that somehow TSLA is in the grip of an attack by short-sellers. As can be seen from the chart below TSLA traditionally has a high level of short-seller interest but the current level of interest is at historic lows.
In any form of trading context is everything and without context, your narrative is either fit only for wrapping fish and chips in or costing you and those silly enough to invest with you a small fortune. As they say, don’t fight the tape.